My name is Don Meseck, Regional Labor Economist, assigned to the Labor Market and Performance Analysis Branch (LMPA), Washington State Employment Security Department. I provide economic analysis services and Labor Market Information (LMI) for a seven-county area in Washington State. Some of our major clients are: WorkSource offices, the North and South Central Washington Workforce Development Councils, economic development councils, chambers of commerce, ports, public and private sector schools, elected officials, the media, banks, realtors, other businesses, etc. primarily in Adams, Chelan, Douglas, Grant, Kittitas, Okanogan, and Yakima counties.

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In Slides 3-6, I will summarize unemployment and labor force trends from 2005-2014, concentrating on changes that have occurred over the last year in Yakima County. Data from the BLS’ Labor Area and Unemployment (LAUS) program was used to provide much of this information. In Slides 7-11, will discuss employment and wage trends, as of 2013, for Yakima County’s 22 industries/sectors. Out of these 22 industries, five provided the most jobs and largest payrolls in Yakima County in 2013 - the most recent year for which we have detailed annual average employment and wage data. Please note that annual average total covered employment and wage data for 2014 will not be available until July 2015. In Slides 12-18, will provide an overview of 2014 nonfarm employment trends in Yakima County, highlighting recent trends for several major industries/sectors. Estimates for Yakima County and Washington State were obtained from the Bureau of Labor Statistics (BLS) Current Employment Statistics (CES) program. In Slides 19-20, will summarize how my 2014 nonfarm employment projections for Yakima County (made one year ago) compared with to actual employment figures. Will also project how the County’s nonfarm labor market will fare this year - in 2015. These are my estimates - not official government projections. The bottom line, or presentation summary, is contained in Slide 21

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Washington state’s monthly not seasonally adjusted unemployment rates decreased, year over year, in each of month of 2014. The annual average unemployment rate for the State declined one percentage point between 2013 and 2014, from 7.0 percent to 6.0 percent, indicating an improving statewide economy. In Yakima County, the annual average rate decreased one and one-tenths percentage points between 2013 and 2014, from 9.2 to 8.1percent, respectively. There are still some concerns however in reviewing annual average unemployment rate trends for the County and for the State. Note the difference in the magnitude of the rates, in both areas, from 2005-2008, and from 2009-2014. In Yakima County for example, unemployment rates were in the 6-7 percent range from 2005-2008. In the next five years (from 2009-2013) not seasonally adjusted rates lingered in the 9-10 percent range. However, in 2014 the County’s rate averaged 8.1 percent, approaching 2005-2008 levels of 6-7 percent. The bottom line: the local unemployment rate has been moving in the right direction for the past three consecutive years (2012, 2013, and 2014).

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Preliminary labor force data show that Washington state’s average annual not seasonally adjusted unemployment rate decreased one percentage point between 2013 and 2014, from 7.0 percent to 6.0 percent. Between the Decembers of 2013 and 2014 the rate decreased from 6.6 to 6.2 percent, a drop of four-tenths of a percentage point. In Yakima County, preliminary data indicate that the average annual unemployment rate decreased one and one-tenths percentage points between 2013 and 2014, from 9.2 to 8.1 percent. However, the not seasonally adjusted unemployment rate rose four-tenths of a point in December 2014 to 10.8 percent, from 10.4 percent in December 2013. Why? The number of unemployed residents grew more rapidly than the labor force, hence this four-tenths point year-over-year rise in the rate. But, let’s look a little deeper at the labor force numbers. . .

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Between the Decembers of 2013 and 2014 the CLF grew 4.3 percent, from 117,140 to 122,210 residents (meaning that 5,070 more residents were in the labor force). However, the number of unemployed also grew; 930 more County residents were out of work this December than in December 2013. In fact, the number of unemployed grew at a faster rate (7.6 percent) than the labor force expanded (4.3 percent), hence - Yakima County’s unemployment rate rose four-tenths of a percentage point between the Decembers of 2013 and 2014.

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My text boxes usually sum up what I consider the key take-away from each slide. In this Power Point slide please note that Yakima County's Civilian Labor Force (CLF) rose 4.3 percent between the Decembers of 2013 and 2014. Washington's CLF increased 1.4 percent between the Decembers of 2013 and 2014.

But also note that after a weak start from January through June 2014, the County’ and the State’s labor forces finished the year strong and either stabilized or posted year-over-year gains in each of the last six months of 2014.

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The North American Industry Classification System (NAICS) is an industry classification system that groups businesses/organizations into categories or sectors based on the activities in which they are primarily engaged. For this briefing, the most recent average annual covered employment and wage figures (for 2013) were analyzed using Washington State Employment Security Department’s Quarterly Census of Employment and Wage (QCEW) data for Yakima County, primarily at the 2-digit NAICS code level.

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The National Bureau of Economic Research (NBER) announced that the national recession occurred from December 2007-June 2009. But, the effects of this recession hit Yakima County’s labor market primarily in 2009 and 2010. You can see that the “valley” of our local recession here in Yakima County occurred in 2010. Please keep in mind that these total covered employment and wage data, include nonagricultural and agricultural employers. Total covered employment rose from 101,249 jobs in 2011 to 102,748 in 2012, to 103,585 in 2013 as shown in this graph. This was a 1,499-job and a 1.5-percent upturn during 2012, and an 837-job and a 0.8-percent upturn during 2013. Between 2011 and 2012 agricultural employers added 1,956 jobs (i.e., in NAICS 11) up 7.8 percent. Hence the lion’s share of this annual average upturn in Yakima County during 2012 was attributed to one industry – agriculture. Between 2012 and 2013 agricultural employers added only 15 jobs, up 0.1 percent. Hence most of the 837 new jobs in 2013 were with “nonfarm” businesses/organizations, as follows: •  161 were in construction •  409 were in manufacturing •  278 were in wholesale trade (i.e. fresh fruit packinghouses), and •  142 were in food services and drinking places.

This slide and the next slide (“Top 5 Industries by Percent of Total Wages”) rank Yakima County’s top industries in terms of jobs and wages provided in the 22 major industries/sectors, mentioned earlier. In 2013, QCEW data showed that Yakima County’s labor market provided 103,585 jobs. More than two-thirds of all local jobs were in five (i.e., agriculture, local government, health services, retail trade, and manufacturing) two-digit NAICS industries or sectors. Hence, for a Metropolitan Statistical Area (MSA), Yakima County is not a very diverse economy.

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In 2013, QCEW data showed that Yakima County’s labor market provided almost $3.5 billion in wages. Approximately two-thirds of all wage income countywide was earned in just five industries: agriculture, health services, local government, manufacturing, and retail trade.

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This slide summarizes the differences between the industries that provided the most jobs in the Yakima County economy in 2013, and the industries that pumped the most money (via wages/payrolls) into that economy. Specifically: •  Agriculture provided 26.1 percent of all jobs countywide, but supplied only 19.4 percent of total wage income. Why? Many jobs in agriculture are seasonal. •  Conversely, private health services tallied 12.4 percent of total covered employment , but accounted for 15.8 percent of total wage income – indicating it is a relatively “good paying” industry. •  The local retail trade sector accounted for almost one in ten jobs countywide, but provided only 7.8 percent of total wage income. •  Conversely, manufacturing supplied only 7.9 percent of all jobs in Yakima County but 9.7 percent of total wages/payroll. Almost one in every ten dollars of wage income countywide is earned at a local manufacturing firm.

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The National Bureau of Economic Research (NBER) announced that the national recession occurred from December 2007-June 2009. But, the effects of this recession hit Yakima County’s nonfarm labor market primarily in 2009 and 2010, and again as recently as 2012. Please keep in mind that nonfarm employment data do not “count” agricultural jobs. These figures are derived primarily from Current Employment Statistics (CES) data. CES is the primary source of current job figures at the county, state, and national levels. The only annual average employment estimates presently available for 2014 are from CES. Average annual QCEW data (which includes agricultural jobs) for 2014 will not be available until about July 2015. The “valley” of our local recession here in Yakima County occurred in 2010, and we slipped backwards again in 2012, when nonfarm employment averaged just 78,800. Nonfarm employment “peaked” in 2008 at 80,600 jobs - six years ago, but the local economy returned to that level in 2014 when employment established a new “summit” of 80,800.

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This slide I think is one of the most important in this presentation. It helps illustrate and reinforce a generalization about the Yakima County economy that: “In good years, we lag the state. In bad years we lead the State.” The blue bars depict over-the-year employment changes in Washington State, while the orange bars depict over-the-year employment changes in Yakima County. Note that:

•  According to the National Bureau of Economic Research (NBER), the recent US recession occurred from December 2007 through June 2009. Washington's labor market shrank faster than the local labor market during this recession. •  However, the State has been adding nonfarm jobs more rapidly than the County for the last 17 consecutive quarters.

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This slide is also one of the most important in this presentation. It also helps illustrate and reinforce a generalization about the Yakima County economy that: “In good years, we lag the state. In bad years we lead the State.” The blue bars depict over-the-year employment changes in Washington State, while the orange bars depict over-the-year employment changes in Yakima County. Note that: •  The Yakima County nonfarm economy grew at 1.5 percent clip last year while

Washington’s labor market posted an average growth rate of 2.8 percent. •  The last time Yakima’s job market increased at 1.5 percent or more was eight

years ago (in 2006) when it expanded by 2.6 percent.

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Between 2013 and 2014, Washington's labor market provided 82,900 new nonfarm jobs, an annual average increase of 2.8 percent. This December, businesses and government organizations across Washington supplied 3,115,700 nonfarm jobs (not seasonally adjusted), compared to 3,032,800 jobs in December 2013, a 2.7 percent year-over-year employment increase. The state’s economy has posted nonfarm employment increases for the past 51 consecutive months (October 2010 through December 2014). The Yakima County nonfarm labor market added approximately 1,200 jobs between 2013 and 2014, an annual average upturn of 1.5 percent. Between the Decembers of 2013 and 2014, the local nonfarm market registered a 2.1 percent and 1,700 job upturn. Employers provided 81,200 jobs in December 2014 versus 79,500 in the corresponding month one-year prior. Yakima County’s employment has increased, year over year, for the past 25 consecutive months (December 2012 through December 2014) although local job growth rates have consistently been less robust than growth rates statewide.

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The 80,800 jobs provided across Yakima County in 2014 was a 1,200-job and 1.5-percent upturn over the 79.600 jobs tallied in 2013.

Since this table is a little hard to read, I graphed annual average gains and losses during 2014 for eight of Yakima County’s major industries in the chart on the next two slides. . .

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This figure summarizes annual average nonfarm employment changes, in terms of jobs gained or lost, in 2014:

•  Construction, non-durable goods manufacturing (primarily food processing), wholesale trade (primarily fresh fruit packinghouses), healthcare and social assistance, and food services all gained jobs over the year.

•  Retail trade stores, professional and business services (i.e., legal, architectural, engineering and accounting services; temporary job placement agencies; call centers, etc.), and local government lost jobs during 2014.

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This graph is similar to the preceding graph, except that it depicts annual average employment changes during 2014, for these eight key sectors, on a percentage basis. It is apparent that Yakima County’s construction firms experienced an excellent year in 2014, netting 325 more jobs (a 10.3 percent growth rate) compared with calendar year 2013.

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This slide, and the next are the only slides in my presentation where I discuss specific employment projections. Even here, I must admit that I do not know with a great deal of confidence, what the future holds for the Yakima County economy. It is hard to develop a model to project employment at the county level. In reality, employment is often driven by individual business decisions. One or two large firms opening, or closing, in Yakima County can make one through all industrial employment projections “out the window.” I wanted to summarize the projections made in February 2014, versus the actual nonfarm employment during 2014. Here it is: •  In February 2014: projections (shown in Red) indicated that jobs would

increase from 79,600 in 2013 to 80,400 in 2014, an 800-job and 1.0-percent upturn.

•  In February 2015: data and estimates showed that nonfarm employment rose from 79,600 in 2013 to 80,800 in 2014, a 1,200-job and 1.5-percent increase.

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Based on my informal projections, I expect that Yakima County’s nonfarm market will increase from 80,800 jobs in 2014 to approximately 82,300 in 2015, a 1,500 job and 1.9-percent upturn.

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(Self explanatory)

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Would like to express my appreciation to Verlynn Best and Thane Phelan for asking me to conduct this briefing today. A special thanks to Thane (Vice President at the Chamber) for arranging the logistical/AV support.

Are there any questions?